AMSTERDAM, Jan. 29, 2020 /PRNewswire/ -- Core
Laboratories N.V. (NYSE: "CLB US" and Euronext Amsterdam: "CLB NA")
("Core", "Core Lab", or the "Company") reported that continuing
operations resulted in fourth quarter 2019 revenue of $156,800,000. Core's operating income was
$21,100,000, with earnings per
diluted share ("EPS") of $0.23, all
in accordance with U.S. generally accepted accounting principles
("GAAP"); operating income, ex-items, a non-GAAP financial measure,
was $25,000,000, yielding operating
margins of 16% and EPS, ex-items, of $0.38. A full reconciliation of non-GAAP
financial measures is included in the attached financial
tables.
Core's Board of Supervisory Directors ("Board") and the
Company's Executive Management continue to focus on strategies that
maximize return on invested capital ("ROIC") and free cash flow
("FCF"), a non-GAAP financial measure defined as cash from
operations less capital expenditures, factors that have high
correlation to maximizing total shareholder return. Core's
asset-light business model and capital discipline promote capital
efficiency and are designed to produce more predictable and
superior long-term ROIC. Bloomberg's calculations using
the latest comparable data available indicate that Core's ROIC
of 20.2% is the highest of the oilfield service companies
listed as Core's Comp Group by Bloomberg.
Segment Highlights
Core Laboratories reports results under two operating segments:
Reservoir Description and Production Enhancement. During the
fourth quarter of 2019, as part of the Company's ongoing efforts to
streamline operating structures and business reporting lines, Core
continued advancing its cost reduction plan and recognized
associated costs of $2,600,000, which
are excluded from the following segment highlights. This plan
seeks to position Core Lab to perform at maximum efficiency while
adapting to changes in North American market conditions.
Reservoir Description
Reservoir Description revenue in the fourth quarter of 2019 was
$102,600,000. The 6% sequential
revenue decline, as compared to the third quarter of 2019, was
attributed to slower than expected progression on international
projects and a steep decline in U.S. activity during the fourth
quarter of 2019. However, international revenue for Reservoir
Description was up 7% in 2019 for the full-year, when excluding the
divestiture of a non-strategic international operation in early
2019. Operating income for the fourth quarter of 2019 on a
GAAP basis was $14,200,000, while operating income, ex-items,
was $17,000,000, yielding
operating margins, ex-items, of 17%, despite a sequential decline
in client activity.
Reservoir Description operations are heavily exposed to
international and offshore activity levels, with approximately 80%
of its revenue sourced from outside of the U.S., where core,
reservoir fluid and derived product samples originate from
international projects. Core conducted services for both
newly developed fields and brownfield extensions in offshore areas
such as: Australia, Brazil, Guyana, Suriname, the Gulf of Mexico, the Middle East and offshore North America. These analytical programs
provide accurate, comprehensive datasets of rock and hydrocarbon
properties that are critical for optimizing reservoir appraisal,
development and production.
In the fourth quarter of 2019, Core Lab, under the direction of
Apache Corporation, initiated wellsite and laboratory analytical
programs to determine the properties of rotary sidewall core
samples and reservoir fluids from the Maka Central-1 well offshore
Suriname. Core Lab is pleased to be assisting the technical
experts at Apache Corporation in this important offshore
discovery.
Also during the fourth quarter of 2019, Core conducted
Fit-For-ReservoirTM core and fluid analytical programs
for an operator working on Alaska's North Slope. Core Lab's
Anchorage facility provided proprietary Non-Invasive Technologies
for Reservoir OptimizationSM
("NITROSM") services, employing quick turn-around,
non-invasive techniques. Digital Rock Characterization
("DRC"), one of the NITROSM technologies, provided the
client with data on reservoir quality, lithologic variations,
pay-zone heterogeneities, porosity and permeability, along with
other rock parameters. Initial data sets were delivered to
the client within 48 hours from the time the rock samples arrived
at Core's Anchorage facility. This allowed the client to
utilize the datasets for both initial field drilling and future
development decisions. DRC delivers a volumetric
reconstruction of the core, allowing the end-user to visualize the
recovered strata in three dimensional images. Moreover, Core
leveraged its proprietary database of physically-measured
laboratory data to quickly generate modeled petrophysical
parameters on the new core. In addition, Continuous Scanning
X-Ray Fluorescence ("CS-XRF"), another non-invasive technology,
provided high-resolution elemental data. Using proprietary
Core Lab methods, these elemental data are then converted to
mineralogy on a millimeter-scale along the full length of the cored
interval. The combination of Core Lab's proprietary DRC,
CS-XRF and other non-invasive technologies yields results that are
unmatched in the industry. NITROSM is becoming a
staple technology in characterizing both unconventional and
conventional reservoirs. These cores from Alaska are now processing through the
traditional program of physical laboratory measurements.
Production Enhancement
Production Enhancement operations, largely focused on complex
completions in unconventional, tight-oil reservoirs in the U.S. and
conventional offshore development projects, posted fourth quarter
2019 revenue of $54,200,000, down
15%, sequentially. Fourth quarter performance was impacted by
a steep sequential decline in U.S. onshore well completion
activity, which declined over 20%, as estimated by Rystad data and
other sources. Operating income on a GAAP basis was
$6,600,000, while operating income,
ex-items, was $7,500,000, which
yielded operating margins of 14%. However, due to cost
controls enacted in the fourth quarter, Production Enhancement
decremental margin performance was in line with expectations.
Core Lab, a technological leader in the design of efficient and
effective high-end energetic systems, continues its focus on the
expansion of GoGunTM production to meet client
demand. Core continues its investments into cutting edge
manufacturing technologies to maximize efficiencies in
GoGunTM production as demand grows. In addition,
during the fourth quarter of 2019, the recently introduced
ReFRACTM product line has experienced increasing client
acceptance. The ReFRACTM technology is utilized in
mechanically isolated re-stimulation programs where an internal
string is used to isolate older, depleted stages in previously
under-stimulated wells. The first-to-market
ReFRACTM technology creates a consistent hole size
through two strings of casing. This re-completion method is
gaining popularity because it allows operators to perforate, pump
and stimulate new reservoir rock between the original stages of the
well and increase hydrocarbon recovery without the expense of
drilling and completing a new well. Operators using Core's
ReFRACTM technology have reported they can now complete
twice as many stages per day compared to conventional perforating
systems, reducing their operating costs and improving cash
flow.
Also in the fourth quarter of 2019, field trials were
successfully completed in preparation for the full commercial
release of Core's innovative Pulse WaveTM system,
another technology focused on recompletion of existing wells.
Combining proprietary propellants with Core's other patented
high-end energetic products, the Pulse WaveTM technology
facilitates recompletion programs when standard plug and perf
methods are not an option due to pre-existing perforations in the
well. The Pulse WaveTM system uses a unique energy
transfer technology to trigger multiple perforating guns with high
reliability and reduced hardware requirements. During field
trials, the Pulse WaveTM technology achieved a 100%
success rate across multiple stages on a dozen wells, potentially
saving clients significant operating time and costs in the Permian
Basin, Bakken, and Barnett plays.
Core's diagnostic technology services continue to demonstrate
value in offshore completions. Core was initially engaged to
perform completion diagnostic services on a deepwater well in the
Gulf of Mexico in
2017. SpectraStim™, SpectraScan®, and
PackScan® imaging technologies were deployed on Miocene
strata to evaluate the sand control completion program in this
offshore well. When the initial work identified voids in the
gravel pack, Core was able to advise the client on a remediation
plan. Following remediation, the interval was re-scanned, and
Core verified that the voids were eliminated. Core's
assistance reduced the risk of potentially costly damage to the
production tubing and equipment. During the fourth quarter of
2019, Core Lab was reengaged to deploy PackScan® in the
same well to determine the current integrity of the gravel pack
after two years of production. The objective was to identify
the location of produced proppant and formation solids. While
these results are currently under evaluation, it demonstrates how
Core Lab's completion diagnostics can also be used to assess the
stability of a sand control program over time.
Free Cash Flow, Dividends and Share Repurchases
During the fourth quarter of 2019, Core continued to generate
FCF, with cash from operations of $21,300,000 and capital expenditures of
$4,700,000, yielding FCF of
$16,600,000.
The fourth quarter of 2019 also marks the 73rd
consecutive quarter that the Company generated positive FCF. Core's
fourth quarter 2019 free cash was returned to Core's shareholders
via the Company's regular quarterly dividend. As
announced on 30 December 2019, Core's
Board of Supervisory Directors approved a plan to reduce the
Company's future quarterly dividends to $0.25 per share beginning in the first quarter of
2020. While the Company will continue to monitor and
implement operating efficiencies and cost reductions, Core believes
reducing future quarterly dividends will preserve Core's strong
balance sheet. Based upon a quarterly dividend of
$0.25 per share and the number of
shares outstanding as of 31 December
2019, the annual dividend distribution would approximate
$44 million. For the 2019 full
year, and after funding its 2019 capex program, the Company
generated $67 million of FCF, or
$23 million of FCF in excess of the
planned future annual dividend distribution. This provides
additional flexibility in the Company's capital allocation
policy. Core continues to generate significant levels of FCF,
which will be returned to shareholders via the Company's regular
quarterly dividend and opportunistic share repurchases, as well as
to manage the Company's level of outstanding debt.
In January 2020, Core reinitiated
its share repurchase program, buying 20,000 shares at an average
share price of $40.17. Core
anticipates additional share repurchases during the first quarter
of 2020, while also reducing levels of debt on its outstanding
revolving credit facility.
On 8 October 2019, the Board
announced a quarterly cash dividend of $0.55 per share of common stock, which was paid
on 19 November 2019 to shareholders
of record on 18 October 2019. Dutch withholding tax was
deducted from the dividend at a rate of 15%.
On 14 January 2020, the Board
announced a quarterly cash dividend of $0.25 per share of common stock, payable on
14 February 2020 to shareholders of
record on 24 January 2020.
Dutch withholding tax will be deducted from the dividend at a
rate of 15%.
Return On Invested Capital
Core Lab's ROIC of 20.2% is the highest of the peer group
compiled and reported by Bloomberg. The Company's Board has
established an internal performance metric of achieving a leading
relative ROIC performance compared with the oilfield service
companies listed as Core's Comp Group by Bloomberg. The
Company and its Board believe that ROIC is a leading long-term
performance metric used by shareholders to determine the relative
investment value of publicly-traded companies. Further, the
Company and its Board believe that shareholders will benefit if
Core consistently performs at high levels of ROIC relative to its
Comp Group. Core Lab's commitment to capital stewardship is
driven in part by the Company's continuing philosophy of having a
low capital-intensive business, averaging less than 4% of Company
revenues.
According to the latest Comp Group financial information from
Bloomberg, Core's ROIC is the highest of any comparably-sized
oilfield service company (greater than $1.5
billion market capitalization). Comp Group companies
listed by Bloomberg include: Halliburton, Schlumberger, National
Oilwell Varco, Baker Hughes, TGS-NOPEC Geophysical Company, Wood
(formerly known as "The Wood Group"), and Apergy, among
others. Core Lab is one of only three of the 18 companies
listed in the Comp Group posting ROIC that exceeded their Weighted
Average Cost of Capital ("WACC"). Core's ratio of ROIC to
WACC is the highest of any company in the Comp Group.
Environmental, Social and Governance
On 14 November 2019, Bloomberg
announced that Core Lab would be one of the 325 companies, out of
over 5,000 publicly-traded companies from 50 industries
representing 42 countries and regions, to be included in the 2020
Bloomberg Gender-Equality Index ("BGEI"). The BGEI, with its
focus on gender equality in the workplace, is yet another metric by
which investors can gauge a company's commitment to environmental,
social and governance factors across industries.
First Quarter 2020 Revenue and EPS Guidance
Consistent with the initial guidance provided on 30 December 2019, Core projects consolidated
first quarter 2020 revenue of approximately $159,000,000 to $164,000,000 and operating income of
approximately $25,000,000 to
$27,000,000, yielding operating
margins of approximately 16%. The Company's EPS for the first
quarter of 2020, using an effective tax rate of 20%, is projected
to be $0.39 to $0.41. Further, the Company will continue
to execute on planned opportunities to efficiently align the
business with market conditions.
Core Lab's first quarter 2020 guidance is based on projections
for the underlying operations and excludes gains or losses in
foreign exchange.
Succession Planning Announcements
David Demshur to Retire at End
of 2020
David Demshur, after more than 25
years as Core Lab's Chairman and Chief Executive Officer, a tenure
rarely achieved in any industry, is announcing his plans to retire
effective 31 December 2020. Mr.
Demshur will transition from the roles of Chairman and Chief
Executive Officer on 20 May 2020,
coinciding with Core Lab's Annual Shareholders' Meeting. Mr.
Demshur will not seek re-nomination to the Company's Supervisory
Board of Directors in 2020. Mr. Demshur's retirement, at the
age of 65, follows more than 40 years of dedicated leadership and
innovation at Core Lab. He led the management buyout of Core
Lab in 1994 and its IPO in 1995. Since the IPO, and under Mr.
Demshur's leadership, Core Lab's total shareholder return has
consistently outperformed the other members of the Philadelphia Oil
Service Sector Index in the aggregate. This superior performance
was driven by the execution of the Company's long-standing growth
strategies and disciplined adherence to the Company's three
financial tenets. Also, during Mr. Demshur's
leadership, Core Lab significantly expanded its portfolio of
services and products and global business, now operating in more
than 50 countries.
Lawrence Bruno to be appointed
Chairman and Chief Executive Officer in addition to serving in his
current roles as President and Chief Operating Officer
Effective 20 May 2020,
Lawrence Bruno, currently a member
of the Company's Board of Supervisory Directors, will succeed
David Demshur as the Company's
Chairman and Chief Executive Officer in addition to serving in his
current roles as President and Chief Operating Officer. Mr.
Bruno holds a Master's degree in geology, has been in the industry
for more than 35 years, and with Core Lab for more than 21
years. As President and Chief Operating Officer, Mr. Bruno
has led the Company's global operations for both of its business
segments, Reservoir Description and Production Enhancement.
Over the last several years, Mr. Bruno has served as a technical
spokesperson for many investor presentations and panels in the oil
and gas industry, and has been instrumental in driving the
Company's technology innovation that will continue to be a critical
strength in the years to come.
Earnings Call Scheduled
The Company has scheduled a conference call to discuss Core's
fourth quarter 2019 earnings announcement. The call will
begin at 7:30 a.m. CST / 2:30 p.m. CET on Thursday, 30 January 2020.
To listen to the call, please go to Core's website at
www.corelab.com.
Core Laboratories N.V. is a leading provider of proprietary and
patented reservoir description and production enhancement services
and products used to optimize petroleum reservoir
performance. The Company has over 70 offices in more than 50
countries and is located in every major oil-producing province in
the world. This release, as well as other statements we make,
includes forward-looking statements regarding the future revenue,
profitability, business strategies and developments of the Company
made in reliance upon the safe harbor provisions of Federal
securities law. The Company's outlook is subject to various
important cautionary factors, including risks and uncertainties
related to the oil and natural gas industry, business conditions,
international markets, international political climates and other
factors as more fully described in the Company's most recent Forms
10-K, 10-Q and 8-K filed with or furnished to the U.S. Securities
and Exchange Commission. These important factors could cause
the Company's actual results to differ materially from those
described in these forward-looking statements. Such
statements are based on current expectations of the Company's
performance and are subject to a variety of factors, some of which
are not under the control of the Company. Because the
information herein is based solely on data currently available, and
because it is subject to change as a result of changes in
conditions over which the Company has no control or influence, such
forward-looking statements should not be viewed as assurance
regarding the Company's future performance. The Company
undertakes no obligation to publicly update or revise any
forward-looking statement to reflect events or circumstances that
may arise after the date of this press release, except as required
by law.
Visit the Company's website at www.corelab.com. Connect with
Core Lab on Facebook, LinkedIn and YouTube.
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in
thousands, except per share data)
(Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
vs.
Q3-19
|
|
|
vs.
Q4-18
|
|
|
REVENUE
|
|
$
|
156,778
|
|
|
$
|
173,200
|
|
|
$
|
173,207
|
|
|
(9.5)%
|
|
|
(9.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
117,749
|
|
|
|
125,996
|
|
|
|
125,694
|
|
|
(6.5)%
|
|
|
(6.3)%
|
|
|
General and
administrative expenses
|
|
|
9,773
|
|
|
|
11,012
|
|
|
|
24,721
|
|
|
(11.3)%
|
|
|
(60.5)%
|
|
|
Depreciation and
amortization
|
|
|
5,535
|
|
|
|
5,697
|
|
|
|
5,721
|
|
|
(2.8)%
|
|
|
(3.3)%
|
|
|
Other (income)
expense, net
|
|
|
2,666
|
|
|
|
(712)
|
|
|
|
(907)
|
|
|
NM
|
|
|
NM
|
|
|
Total operating
expenses
|
|
|
135,723
|
|
|
|
141,993
|
|
|
|
155,229
|
|
|
(4.4)%
|
|
|
(12.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
21,055
|
|
|
|
31,207
|
|
|
|
17,978
|
|
|
(32.5)%
|
|
|
17.1%
|
|
|
Interest
expense
|
|
|
3,588
|
|
|
|
3,662
|
|
|
|
3,634
|
|
|
(2.0)%
|
|
|
(1.3)%
|
|
|
Income from
continuing operations before
income tax expense
|
|
|
17,467
|
|
|
|
27,545
|
|
|
|
14,344
|
|
|
(36.6)%
|
|
|
21.8%
|
|
|
Income tax
expense
|
|
|
7,177
|
|
|
|
3,335
|
|
|
|
5,750
|
|
|
115.2%
|
|
|
24.8%
|
|
|
Income from
continuing operations
|
|
|
10,290
|
|
|
|
24,210
|
|
|
|
8,594
|
|
|
(57.5)%
|
|
|
19.7%
|
|
|
Income (loss) from
discontinued operations, net of
income taxes
|
|
|
—
|
|
|
|
(397)
|
|
|
|
408
|
|
|
NM
|
|
|
NM
|
|
|
Net income
|
|
|
10,290
|
|
|
|
23,813
|
|
|
|
9,002
|
|
|
(56.8)%
|
|
|
14.3%
|
|
|
Net income (loss)
attributable to non- controlling
interest
|
|
|
(40)
|
|
|
|
84
|
|
|
|
167
|
|
|
NM
|
|
|
NM
|
|
|
Net income
attributable to Core Laboratories
N.V.
|
|
$
|
10,330
|
|
|
$
|
23,729
|
|
|
$
|
8,835
|
|
|
(56.5)%
|
|
|
16.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
0.23
|
|
|
$
|
0.54
|
|
|
$
|
0.19
|
|
|
(57.4)%
|
|
|
21.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Core Laboratories N.V.
|
|
$
|
0.23
|
|
|
$
|
0.53
|
|
|
$
|
0.20
|
|
|
(56.6)%
|
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares
outstanding
|
|
|
44,634
|
|
|
|
44,716
|
|
|
|
44,401
|
|
|
(0.2)%
|
|
|
0.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
41
|
%
|
|
|
12
|
%
|
|
|
40
|
%
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
102,617
|
|
|
$
|
109,339
|
|
|
$
|
106,557
|
|
|
(6.1)%
|
|
|
(3.7)%
|
|
|
Production
Enhancement
|
|
|
54,161
|
|
|
|
63,861
|
|
|
|
66,650
|
|
|
(15.2)%
|
|
|
(18.7)%
|
|
|
Total
|
|
$
|
156,778
|
|
|
$
|
173,200
|
|
|
$
|
173,207
|
|
|
(9.5)%
|
|
|
(9.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
14,248
|
|
|
$
|
18,835
|
|
|
$
|
10,374
|
|
|
(24.4)%
|
|
|
37.3%
|
|
|
Production
Enhancement
|
|
|
6,586
|
|
|
|
11,456
|
|
|
|
7,682
|
|
|
(42.5)%
|
|
|
(14.3)%
|
|
|
Corporate and
Other
|
|
|
221
|
|
|
|
916
|
|
|
|
(78)
|
|
|
NM
|
|
|
NM
|
|
|
Total
|
|
$
|
21,055
|
|
|
$
|
31,207
|
|
|
$
|
17,978
|
|
|
(32.5)%
|
|
|
17.1%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in
thousands, except per share data)
(Unaudited)
|
|
|
|
Twelve Months
ended
|
|
|
%
Variance
|
|
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
REVENUE
|
|
$
|
668,210
|
|
|
$
|
700,846
|
|
|
(4.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
495,579
|
|
|
|
496,964
|
|
|
(0.3)%
|
|
|
General and
administrative expenses
|
|
|
48,023
|
|
|
|
62,910
|
|
|
(23.7)%
|
|
|
Depreciation and
amortization
|
|
|
22,605
|
|
|
|
23,087
|
|
|
(2.1)%
|
|
|
Other (income)
expense, net
|
|
|
5,319
|
|
|
|
(737)
|
|
|
NM
|
|
|
Total operating
expenses
|
|
|
571,526
|
|
|
|
582,224
|
|
|
(1.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
96,684
|
|
|
|
118,622
|
|
|
(18.5)%
|
|
|
Interest
expense
|
|
|
14,690
|
|
|
|
13,328
|
|
|
10.2%
|
|
|
Income from
continuing operations before income tax expense
|
|
|
81,994
|
|
|
|
105,294
|
|
|
(22.1)%
|
|
|
Income tax expense
(benefit)
|
|
|
(12,290)
|
|
|
|
25,447
|
|
|
NM
|
|
|
Income from
continuing operations
|
|
|
94,284
|
|
|
|
79,847
|
|
|
18.1%
|
|
|
Income (loss) from
discontinued operations, net of income taxes
|
|
|
7,833
|
|
|
|
(58)
|
|
|
NM
|
|
|
Net income
|
|
|
102,117
|
|
|
|
79,789
|
|
|
28.0%
|
|
|
Net income
attributable to non-controlling interest
|
|
|
134
|
|
|
|
263
|
|
|
NM
|
|
|
Net income
attributable to Core Laboratories N.V.
|
|
$
|
101,983
|
|
|
$
|
79,526
|
|
|
28.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
2.11
|
|
|
$
|
1.80
|
|
|
17.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Core Laboratories N.V.
|
|
$
|
2.28
|
|
|
$
|
1.79
|
|
|
27.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
|
44,646
|
|
|
|
44,474
|
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
(15)
|
%
|
|
|
24
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
420,897
|
|
|
$
|
413,082
|
|
|
1.9%
|
|
|
Production
Enhancement
|
|
|
247,313
|
|
|
|
287,764
|
|
|
(14.1)%
|
|
|
Total
|
|
$
|
668,210
|
|
|
$
|
700,846
|
|
|
(4.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
55,140
|
|
|
$
|
54,847
|
|
|
0.5%
|
|
|
Production
Enhancement
|
|
|
38,378
|
|
|
$
|
63,039
|
|
|
(39.1)%
|
|
|
Corporate and
Other
|
|
|
3,166
|
|
|
|
736
|
|
|
NM
|
|
|
Total
|
|
$
|
96,684
|
|
|
$
|
118,622
|
|
|
(18.5)%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(amounts in
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
|
ASSETS:
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
vs.
Q3-19
|
|
|
vs.
Q4-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
11,092
|
|
|
$
|
13,128
|
|
|
$
|
13,116
|
|
|
(15.5)%
|
|
|
(15.4)%
|
|
|
Accounts receivable,
net
|
|
|
131,579
|
|
|
|
137,355
|
|
|
|
129,157
|
|
|
(4.2)%
|
|
|
1.9%
|
|
|
Inventory
|
|
|
50,163
|
|
|
|
53,528
|
|
|
|
45,664
|
|
|
(6.3)%
|
|
|
9.9%
|
|
|
Other current
assets
|
|
|
28,403
|
|
|
|
26,675
|
|
|
|
43,040
|
|
|
6.5%
|
|
|
(34.0)%
|
|
|
Total Current
Assets
|
|
|
221,237
|
|
|
|
230,686
|
|
|
|
230,977
|
|
|
(4.1)%
|
|
|
(4.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
123,506
|
|
|
|
125,078
|
|
|
|
122,917
|
|
|
(1.3)%
|
|
|
0.5%
|
|
|
Right-of-use
assets
|
|
|
75,697
|
|
|
|
76,238
|
|
|
|
—
|
|
|
(0.7)%
|
|
|
NM
|
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
354,233
|
|
|
|
355,694
|
|
|
|
294,933
|
|
|
(0.4)%
|
|
|
20.1%
|
|
|
Total
assets
|
|
$
|
774,673
|
|
|
$
|
787,696
|
|
|
$
|
648,827
|
|
|
(1.7)%
|
|
|
19.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
35,611
|
|
|
$
|
42,191
|
|
|
$
|
41,155
|
|
|
(15.6)%
|
|
|
(13.5)%
|
|
|
Short-term operating
lease obligations
|
|
|
11,841
|
|
|
|
11,869
|
|
|
|
—
|
|
|
(0.2)%
|
|
|
NM
|
|
|
Other current
liabilities
|
|
|
64,142
|
|
|
|
65,937
|
|
|
|
61,392
|
|
|
(2.7)%
|
|
|
4.5%
|
|
|
Total current
liabilities
|
|
|
111,594
|
|
|
|
119,997
|
|
|
|
102,547
|
|
|
(7.0)%
|
|
|
8.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
305,283
|
|
|
|
297,148
|
|
|
|
289,770
|
|
|
2.7%
|
|
|
5.4%
|
|
|
Long-term operating
lease obligations
|
|
|
64,660
|
|
|
|
63,754
|
|
|
|
—
|
|
|
1.4%
|
|
|
NM
|
|
|
Other long-term
liabilities
|
|
|
110,996
|
|
|
|
112,236
|
|
|
|
95,610
|
|
|
(1.1)%
|
|
|
16.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
182,140
|
|
|
|
194,561
|
|
|
|
160,900
|
|
|
(6.4)%
|
|
|
13.2%
|
|
|
Total liabilities and
equity
|
|
$
|
774,673
|
|
|
$
|
787,696
|
|
|
$
|
648,827
|
|
|
(1.7)%
|
|
|
19.4%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
10,290
|
|
|
$
|
24,210
|
|
|
$
|
8,594
|
|
|
Income (loss) from
discontinued operations
|
|
|
—
|
|
|
|
(397)
|
|
|
|
408
|
|
|
Net income
|
|
$
|
10,290
|
|
|
$
|
23,813
|
|
|
$
|
9,002
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
3,228
|
|
|
|
3,311
|
|
|
|
15,661
|
|
|
Depreciation and
amortization
|
|
|
5,536
|
|
|
|
5,697
|
|
|
|
5,721
|
|
|
Deferred income
tax
|
|
|
2,124
|
|
|
|
(3,353)
|
|
|
|
—
|
|
|
Gain on sale of
discontinued operations
|
|
|
—
|
|
|
|
397
|
|
|
|
—
|
|
|
Accounts
receivable
|
|
|
5,733
|
|
|
|
(2,603)
|
|
|
|
14,237
|
|
|
Inventory
|
|
|
3,310
|
|
|
|
(4,287)
|
|
|
|
1,718
|
|
|
Accounts
payable
|
|
|
(5,519)
|
|
|
|
815
|
|
|
|
819
|
|
|
Other adjustments to
net income
|
|
|
(3,400)
|
|
|
|
2,199
|
|
|
|
(9,257)
|
|
|
Net cash provided
by operating activities
|
|
$
|
21,302
|
|
|
$
|
25,989
|
|
|
$
|
37,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(4,732)
|
|
|
$
|
(5,307)
|
|
|
$
|
(5,678)
|
|
|
Proceeds (adjustments)
from sale of discontinued operations
|
|
|
—
|
|
|
|
(1,853)
|
|
|
|
—
|
|
|
Other investing
activities
|
|
|
(402)
|
|
|
|
(437)
|
|
|
|
(96)
|
|
|
Net cash provided
by (used in) investing activities
|
|
$
|
(5,134)
|
|
|
$
|
(7,597)
|
|
|
$
|
(5,774)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(27,000)
|
|
|
$
|
(28,000)
|
|
|
$
|
(34,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
28,000
|
|
|
Dividends
paid
|
|
|
(24,406)
|
|
|
|
(24,399)
|
|
|
|
(24,322)
|
|
|
Repurchase of treasury
shares
|
|
|
(1,806)
|
|
|
|
(411)
|
|
|
|
(2,674)
|
|
|
Other financing
activities
|
|
|
8
|
|
|
|
—
|
|
|
|
(115)
|
|
|
Net cash provided
by (used in) financing activities
|
|
$
|
(18,204)
|
|
|
$
|
(17,810)
|
|
|
$
|
(33,111)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
(2,036)
|
|
|
|
582
|
|
|
|
(984)
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
13,128
|
|
|
|
12,546
|
|
|
|
14,100
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
11,092
|
|
|
$
|
13,128
|
|
|
$
|
13,116
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in
thousands)
(Unaudited)
|
|
|
|
Twelve Months
ended
|
|
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
94,284
|
|
|
$
|
79,847
|
|
|
Income (loss) from
discontinued operations
|
|
|
7,833
|
|
|
|
(58)
|
|
|
Net income
|
|
$
|
102,117
|
|
|
$
|
79,789
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
20,879
|
|
|
|
34,194
|
|
|
Depreciation and
amortization
|
|
|
22,605
|
|
|
|
23,087
|
|
|
Deferred income
tax
|
|
|
(36,345)
|
|
|
|
1,832
|
|
|
Gain on sale of
business
|
|
|
(1,154)
|
|
|
|
—
|
|
|
Gain on sale of
discontinued operations
|
|
|
(8,411)
|
|
|
|
—
|
|
|
Accounts
receivable
|
|
|
(3,191)
|
|
|
|
2,265
|
|
|
Inventory
|
|
|
(3,892)
|
|
|
|
(10,403)
|
|
|
Accounts
payable
|
|
|
(3,757)
|
|
|
|
(1,752)
|
|
|
Other adjustments to
net income
|
|
|
676
|
|
|
|
(17,185)
|
|
|
Net cash provided
by operating activities
|
|
$
|
89,527
|
|
|
$
|
111,827
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(22,269)
|
|
|
$
|
(21,741)
|
|
|
Proceeds from sale of
business
|
|
|
2,980
|
|
|
|
—
|
|
|
Proceeds from sale of
discontinued operations
|
|
|
14,789
|
|
|
|
—
|
|
|
Business acquisitions,
net of cash acquired
|
|
|
—
|
|
|
|
(47,314)
|
|
|
Other investing
activities
|
|
|
(1,177)
|
|
|
|
(1,584)
|
|
|
Net cash used in
investing activities
|
|
$
|
(5,677)
|
|
|
$
|
(70,639)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(123,000)
|
|
|
$
|
(114,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
138,000
|
|
|
|
178,000
|
|
|
Dividends
paid
|
|
|
(97,574)
|
|
|
|
(97,251)
|
|
|
Repurchase of treasury
shares
|
|
|
(3,300)
|
|
|
|
(7,451)
|
|
|
Other financing
activities
|
|
|
—
|
|
|
|
(1,760)
|
|
|
Net cash used in
financing activities
|
|
$
|
(85,874)
|
|
|
$
|
(42,472)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
(2,024)
|
|
|
|
(1,284)
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
13,116
|
|
|
|
14,400
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
11,092
|
|
|
$
|
13,116
|
|
|
Non-GAAP Information
Management believes that the exclusion of certain income and
expenses enables it to evaluate more effectively the Company's
operations period-over-period and to identify operating trends that
could otherwise be masked by the excluded Items. For this
reason, we use certain non-GAAP measures that exclude these Items;
and we feel that this presentation provides a clearer comparison
with the results reported in prior periods. The non-GAAP financial
measures should be considered in addition to, and not as a
substitute for, the financial results prepared in accordance with
GAAP, as more fully discussed in the Company's financial statement
and filings with the Securities and Exchange Commission.
Reconciliation of
Operating Income, Income from Continuing Operations and Earnings
Per Diluted Share from Continuing Operations
(amounts in
thousands, except per share data)
(Unaudited)
|
|
|
|
Operating Income
from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
GAAP
reported
|
|
$
|
21,055
|
|
|
$
|
31,207
|
|
|
$
|
17,978
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
—
|
|
|
|
10,012
|
|
Cost reduction and
other charges
|
|
|
2,578
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
1,359
|
|
|
|
569
|
|
|
|
457
|
|
Excluding specific
items
|
|
$
|
24,992
|
|
|
$
|
31,776
|
|
|
$
|
28,447
|
|
|
|
|
|
Income from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
GAAP
reported
|
|
$
|
10,290
|
|
|
$
|
24,210
|
|
|
$
|
8,594
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
—
|
|
|
|
9,165
|
|
Cost reduction and
other charges
|
|
|
2,062
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
1,087
|
|
|
|
455
|
|
|
|
274
|
|
Impact of higher
(lower) tax rate 2
|
|
|
3,684
|
|
|
|
(2,172)
|
|
|
|
3,059
|
|
Excluding specific
items
|
|
$
|
17,123
|
|
|
$
|
22,493
|
|
|
$
|
21,092
|
|
|
|
|
|
Earnings Per
Diluted Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
GAAP
reported
|
|
$
|
0.23
|
|
|
$
|
0.54
|
|
|
$
|
0.19
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
—
|
|
|
|
0.21
|
|
Cost reduction and
other charges
|
|
|
0.05
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
0.01
|
|
Impact of higher
(lower) tax rate 2
|
|
|
0.08
|
|
|
|
(0.05)
|
|
|
|
0.07
|
|
Excluding specific
items
|
|
$
|
0.38
|
|
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock
compensation expense recognized pursuant to FASB ASC 718 "Stock
Compensation" associated with executives reaching
eligible retirement
age.
|
(2) 2019 Quarter 3
and 4 include adjustments to reflect tax expense at a normalized
rate of 20%. 2018 Quarter 4 includes adjustments to reflect tax expense at a normalized
rate of 15%.
|
Segment
Information
(amounts in
thousands)
(Unaudited)
|
|
|
|
Operating Income
from Continuing Operations
|
|
|
|
Three Months Ended
December 31, 2019
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
14,248
|
|
|
$
|
6,586
|
|
|
$
|
221
|
|
Foreign exchange
losses
|
|
|
649
|
|
|
|
425
|
|
|
|
285
|
|
Cost reduction and
other charges
|
|
|
2,109
|
|
|
|
469
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
17,006
|
|
|
$
|
7,480
|
|
|
$
|
506
|
|
Return on Invested Capital
Return on Invested Capital ("ROIC") is based on Bloomberg's
calculation on the trailing four quarters from the most recently
reported quarter and the balance sheet of the most recent reported
quarter, and is presented based on our belief that this non-GAAP
measure is useful information to investors and management when
comparing our profitability and the efficiency with which we have
employed capital over time relative to other companies. ROIC is not
a measure of financial performance under GAAP and should not be
considered as an alternative to net income.
ROIC of 20.2% is defined by Bloomberg as Net Operating Profit
("NOP") of $94 million plus Cash
Operating Tax Benefit ("COT") of $14
million divided by Total Invested Capital ("TIC") of
$533 million, where NOP is defined as
GAAP net income before minority interest plus the sum of income tax
expense, interest expense, and pension expense less pension service
cost and COT is defined as income tax expense plus the sum of the
change in net deferred taxes, and the tax effect on interest
expense and TIC is defined as GAAP stockholder's equity plus the
sum of net long-term debt, allowance for doubtful accounts, net
balance of deferred taxes, income tax payable, and other
charges.
Free Cash Flow
Core uses the non-GAAP measure of free cash flow to evaluate its
cash flows and results of operations. Free cash flow is an
important measurement because it represents the cash from
operations, in excess of capital expenditures, available to operate
the business and fund non-discretionary obligations. Free cash flow
is not a measure of operating performance under GAAP, and should
not be considered in isolation nor construed as an alternative
consideration to operating income, net income, earnings per share,
or cash flows from operating, investing, or financing activities,
each as determined in accordance with GAAP. Free cash flow should
not be considered a measure of liquidity. Moreover, since free cash
flow is not a measure determined in accordance with GAAP and thus
is susceptible to varying interpretations and calculations, free
cash flow as presented may not be comparable to similarly titled
measures presented by other companies.
Computation of
Free Cash Flow
(amounts in
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
ended
|
|
|
|
|
December 31,
2019
|
|
|
December 31,
2019
|
|
|
Net cash provided by
operating activities
|
|
$
|
21,302
|
|
|
$
|
89,527
|
|
|
Capital
expenditures
|
|
|
(4,732)
|
|
|
|
(22,269)
|
|
|
Free cash
flow
|
|
$
|
16,570
|
|
|
$
|
67,258
|
|
|
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SOURCE Core Laboratories N.V.